Nintendo Competition
Now Viewing Nintendo's competition in: Electronic Gaming Products (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the company’s primary customers? - Typical customers include mass merchandisers, wholesale clubs, electronic superstores, specialty game stores, and Internet retailers.
How many retail outlets carry the company’s products? - Hardware with high US retail penetration may be on the shelves of 20,000 or more outlets.
How old is the average consumer for the company’s products? - Once considered a product for those under 18, the average video game buyer is about 37.
What are the company’s most effective marketing vehicles? - Major marketing vehicles include ads in platform-specific gaming magazines, special in-store promotions, and company websites.
What distribution channels does the company use to sell its products? - In-house sales forces and distributors are the primary sales channels.
What are the company’s typical product prices? - Hardware prices range from $15 for an inexpensive joystick to $600 or more for a robust console system.
What is the product life cycle for the company’s products? - Hardware consoles and supporting peripherals generally have a life cycle of four to six years, followed by heavily discounted prices and slowing sales.
Competitive Landscape
Demand is driven primarily by personal income. The profitability of individual companies depends on effective marketing, competitive product design, and manufacturing efficiency. Market success drives additional revenue via royalties paid by third-party game developers. The industry is capital-intensive: average annual revenue per employee is about $700,000.
Business Challenges
CRITICAL ISSUES
Dependence on Personal Income - Playing video games is a leisure activity and electronic gaming products a discretionary purchase. Core gamers are less likely to reduce purchases in a slow economy, but as video games become more mainstream, the impact of economic downturns increases.
Cyclical Nature of Industry - Electronic gaming products have a historical life cycle of four to six years of strong sales followed by diminishing sales and heavily discounted prices. Sales of hardware and software slow near the end of a product’s life cycle, as consumers anticipate the release of next-generation products. At the same time, software development costs increase as companies continue to develop for current platforms and ramp up investment in products for the new platform. Hardware companies face heavy investments in R&D and marketing prior to realizing any revenue from new platforms.
Industries Where Nintendo Competes
- Consumer Products Manufacturers
- Consumer Electronics
- Electronic Gaming Products(primary)
- Toys & Games
- Consumer Electronics
- Computer Software
- Entertainment & Games Software
